[Coursera] Model Thinking (University of Michigan) (modelthinking)

Model Thinking

Scott E Page

Compounding
Exponential Growth
Rule of 72

X dollars
r% interest

food. 1 - 0 ^)

I00C\*vS)~ 1°^

lOSC\r.<£)^ 10^

in^

106 C l^-cfe ) 10

G = GDP
r% growth

Year ^2%_6%^

0

100

1000

0

1

IS
_0

10

121

1791

9

35

200

7686

0

100

724

339,3

Rule of 72: Divide
the growth rate
into 72 and it tells
you (approximate)
time for GDP to
DOUBLE.

Rule of 72

Annual Change in Real GDP Since 1930

20

15

icr*

0 -

-5

10

15

r

Source: Bureau of Economic Analysis

. 1 1 limn, iiliillli.iiiiii^

O LA

tn m

© lo
*

o la

in la

S LA
SO

LA

O LA O LA

00 00 O O)

© LA

o o

9999399393993988

Continuous Compounding

_ _\4r

Linear

Exponential

11

Model Thinking

Scott E Page